Chapter 1Introduction

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1.1 Introduction:

To achieve the desire objective for growth and prosperity the world economy always changed to

integrate itself in the parts of the world. Both developed and underdeveloped countries are

supposed to move the wheel of socioeconomic development by making resources to facilitate the

economic growth through appropriate allocation of the same. In Bangladesh the idle money is

not properly canalizes due to some non availability of investment arena with a safe return of both

principle and interest thereof. Most of the potential entrepreneurs often gather in the capital

market to meet the capital requirements. The surplus units of the society are not supposed to

invest their money. So, they are often ready to supply their money to purchase securities from the

capital markets. As a result stock exchange plays a crucial role to mobilize capital or the

development of a capital market. Dhaka Stock Exchange, the frontline organization for the

securities market development of Bangladesh, was incorporated on 28th April, 1954 as East

Pakistan Stock Exchange Association Limited which started formal trading in 1965 at

Narayangonj. Subsequently, in 1962 it was renamed as Dhaka Stock Exchange Ltd. (DSE)

1.2 Background of the Study:

This paper has been prepared based on different activities of the Dhaka Stock Exchange (DSE).

This paper has been prepared based on the surrounding things of Dhaka Stock Exchange which

include its history to work. All information is secondary and collected from different books

published by the Dhaka Stock Exchange and its informative website. Beside Dhaka stock

Exchange Library have adequate books to know properly about Dhaka Stock Exchange.

1.3 Objective of the study:

The study carries much importance in view of the fact that the economic development of

Bangladesh is closely linked with the strong and healthy financial organizations, which facilitate

mobilization of domestic and foreign funds on a large scale. Investment organizations are doing

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their jobs more competitively now a day. Attracting the people to save their money by

developing various products and schemes, investing the fund in a field where they can profitable

in long way, is the main focus of this study. This research gap induced me to undertake the

study. It is hoped that the findings of the study will be useful for the readers and young learners

to get knowledge about the topic. It will also add to existing stock of reports in the library

section. The main objective of practical orientation on stock market is to get a clear idea about

investment environment, how it runs and what function it does. Again, the information of DSE

totally enhance the trainee gets a chance to familiarize him with a new knowledge. Furthermore,

the orientations is very useful to detect whether the theoretical knowledge match with real life

scenario or not.

Broad Issue: To know the history of Dhaka Stock Exchange with its different activities, along

that emphasize on its work procedure with technical terms and the perfect use of it at field lavel.

Specific Issue: In addition to the principal objective, the following are some of the common but

significant objectives of the study:

1. To know about the nature of the Dhaka Stock Market.

2. To know about the scope of investment in the stock market.

3. To know about the work station of Dhaka stock Exchange and its way of settlement of money.

4. To know about the procedure of securities exchange commission

1.4 Scope of the Study:

Though DSE do a lot of activities like listing of different stock, bond, Treasury bond etc, from

this thesis paper reader can know proper function of DSE with its latest rules and regulations. I

include all the secondary and primary data which are currently exposure of DSE.

1.5 Methodology of the study:

1 Data collection: For conducting the study I used the following Method-

Collection of primary data: Some study-related data are collected from

designing questionnaires, personal interview, and from related instruments.

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Collection of secondary data: to prepare the report, I used many data and literary

information for which I had depended on secondary sources. Secondary Sources include -

I. Monthly review of Dhaka Stock Exchange

II. Different journals and magazines and

III. Other related books.

Along with these, Observation is another method that was given emphasis in the study.

1.6 Limitation:

To do the thesis I have face some problems as I working in a securities, I have to find out time and proper way to collect the information. Moreover, the rules are complicated and they are not so easy to find out and I have to study lot of listed Books of DSE to know the Things properly.

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Chapter 2

Literature Survey

2.1 What is Stock Exchange?

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A organized marketplace in which stocks, Common Stock Equivalents and bonds are traded by

members of the exchange, acting both as agents (brokers) and as principals (dealers or traders).

Most exchanges have a physical location where brokers and dealers meet to execute orders from

institutional and individual investors to buy and sell securities. Each exchange sets its own

requirements for membership. Investors are generally not given free access to trading systems.

Entry into the exchange's systems is intermediate by brokers. Brokers may simply route orders to

exchanges. They sometimes make decisions as to what exchange, and what system within the

exchange, should process various parts of an order. In open outcry markets, brokers also

physically represent orders on the floor of the exchange.

Stock exchanges are formally organized secondary markets for financial assets that have already

been issued in primary capital markets. Stock markets have become the hallmark of successful

modern capitalist economies, despite the frequency of volatile price movements that lead to

excessive speculation followed by panics and despite repeated scandals. They play an important

role, however, for both the primary capital market and the mobilization of bank credit within any

economy, basically by providing liquidity for the initial investors in government or corporate

debt or incorporation stock. The assurance that a ready market exists for the sale of an investor's

holdings in case of second thoughts, emergencies, or better alternatives for investment makes it

easier to place debt or equity in the first place on the primary capital market. The daily pricing of

all such financial products on a stock exchange also makes them ideal instruments as collateral

for loans. In sum, stock exchanges are important complements to the efficient operation of the

rest of an economy's financial sector.

The historical development of worldwide stock exchanges shows that three features are essential

for their long-term success: a large stock of homogeneous, readily identified financial assets

available to the public; a numerous and diverse customer base that is aware of the financial assets

available; and a set of trustworthy intermediaries to handle trades of the various financial

products among the customers.

2.2 History of Stock Exchange

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The history of stock exchanges can be traced to 12th century France, when the first brokers are

believed to have developed, trading in debt and government securities. Unofficial share markets

existed across Europe through the 1600s, where brokers would meet outside or in coffee houses

to make trades. The Amsterdam Stock Exchange, created in 1602, became the first official stock

exchange when it began trading shares of the Dutch East India Company. These were the first

company shares ever issued.

By the early 1700s there were fully operational stock exchanges in France and England, and

America followed in the later part of the century. Share exchanges became an important way for

companies to raise capital for investment, while also offering investors the opportunity to share

in company profits. The early days of the stock exchange experienced many scandals and share

crashes, as there was little to no regulation and almost anyone was allowed to participate in the

exchange.

Today, stock exchanges operate around the world, and they have become highly regulated

institutions. Investors wanting to buy and sell shares must do so through a share broker, who

pays to own a seat on the exchange. Companies with shares traded on an exchange are said to be

'listed' and they must meet specific criteria, which varies across exchanges. Most stock

exchanges began as floor exchanges, where traders made deals face-to-face. The largest stock

exchange in the world, the New York Stock Exchange, continues to operate this way, but most of

the world's exchanges have now become fully electronic.

2.3 Function of Stock Exchange

Although the stock exchange market has multiple functions, its main activities are Two:

To promote the savings and for them to be canalized towards of carrying through

investment projects that otherwise wouldn’t be possible you need that the issuing

institution of the securities to be admitted for quoting. The negotiations will be done on

the primary market.

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To provide liquidity to the investors. The investor can recuperate the money invested

when needed. For it, he has to go to the stock exchange market to sell the securities

previously acquired. This function of the stock market is done on the secondary market.

Other functions of the stock exchange market as an organization are:

To guaranteed the legal and economic security of the agreed contracts.

To provide official information about the quantities that are negotiated and of the quoted prices.

To fix the prices of the securities according to the fundamental law of the offer

and the demand. Specifying a bit more and centering on the two main agents that

intervene in the market, investors and companies, we could do the following

classification: It permits Functions done by the stock exchange market in favor of the

investor; it permits him the access to the profitable activities of the big companies.

It offers liquidity to the security investments, through a place in which to sell or buy

securities.

For the investor to have a political power in the companies in which he invests its

savings due that the acquisition of ordinary shares gives him the right (among other

things) to vote in the general shareholders meetings of the company in question.

It offers the possibility of diversifying your portfolio by enlarging the field of

strategy of investments due to alternative options, as could be the derived market, the

money market, etc. With respect to the function done by the stock exchange market in

favor of the

Companies:

It supplies them with the obtaining of long-term funds that permits the company

to make profitable activities or to do determine projects that otherwise wouldn’t be

possible to develop for lack of financing. Also, this funding signifies a less cost than if

obtained at other channels.

The securities quoted at the stock exchange market usually have more fiscal

purpose advantages for the companies.

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It offers to the company’s free publicity, which in other way would suppose

considerable expenses. The institution is objecting of attention of the media (television,

radio, etc.) in case any important change in its owners (the share holders).

2.4 Stock Exchange in Bangladesh

Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), established in 1954 where

trading is conducted by Computerized Automated Trading System and Chittagong Stock

Exchange (CSE), established in 1995 which is also conducted by Computerized Automated

Trading System . All exchanges are self- regulated, private sector entities which must have their

operating rules approved by the SEC

2.4.1 History of Dhaka Stock Exchange in Bangladesh

The Necessity Of Establishing A Stock Exchange In The Then East Pakistan Was First Decided

By The Government When, Early In 1952.It Was Learnt That The Calcutta Stock Exchange Had

Prohibited The Transactions In Pakistani Shares And Securities. The Provincial Industrial

Advisory Council Soon Thereafter Set Up An Organizing Committee For The Formation Of A

Stock Exchange In East Pakistan. A Decisive Step Was Taken The Second Meeting Of The

Organizing Committee Held On The 13th March, 1953. In The Cabinet Room, Eden Building,

Under The Chairmanship Of Mr. A. Khaleeli, Secretary Government Of East Bengal ,

Commerce, Labor And Industries Department At Which Various Aspects Of The Issue Were

Discussed In Detail. Then the Central Governments Proposal Regarding the Karachi Stock

Exchange Opening a Branch at Dhaka. , did Not Find Favor with the Meeting Who Felt That

East Pakistan Should Have an Independent Stock Exchange. It Was Suggested That Dhaka

Narayanganj Chamber Of Commerce & Industry Should Approach Its Members For Purchase Of

Membership Cards At RS.2000 Each For The Proposed Stock Exchange. The Location of the

Exchange It Was Thought Should Be either Dhaka Narayanganj or Chittagong. An Organizing

Committee Was Appointed Consisting Of Leading Commercial And Industrial Personalities Of

The Province With Mr. Mehdi Ispahani As The Convener In Order To Organize The Exchange.

The Chamber Informed Its Members And Members Of Its Affiliated Associations Of The

Proceedings Of The Above Meeting, Requesting Them To Intimate Whether They Were

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Interested In Joining The Proposed Stock Exchange. This Was Followed By A Meeting, At The

Chamber Of About 100 Persons Interested In The Formation Of The Exchange On 07.07.1953.

The Meeting Invited 8 Gentleman To Become Promoters Of The Exchange With Mr. M Mehdi

Ispahani As The Convener And Authorized Them To Draw Up The Memorandum And Article

Of Association Of The Exchange And Proceed To Obtain Register Under The Companies

Act.1913. The Other 7 Promoters Of The Exchange Were Mr. J M Addision-Scott, Mr.

Mhodammed Hanif, Mr. A C Jain, Mr. A K Khan, Mr M Shabbir Ahmed And Mr. Sakhawat

Hossin.

It Was Also Decided That Membership Fee Was To Be Rs.2000 And Subscription Rate At 15

Per Month. The Exchange Was To Consist Of Not More Than 150 Members. A Meeting Of The

Promoters Was Held At The Chamber On 03.09.1953 When It Was Decided To Appoint Orr

Dignam & Co., Solicitors To Draw Up The Memorandum And Articles Of Association Of The

Stock Exchange Based On The Rules Of Stock Exchange Existing In Other Countries And

Taking Into Account Local Conditions.

The 8 Promoters Incorporated The Formation As The East Pakistan Stock Exchange Association

Ltd. on 28.04.1954. As Public Company, On 23.06.1962 The Name Aws Revised To East

Pakistan Stock Exchange Ltd. Again On 14.05.1964 The Name Of East Pakistan Stock Exchange

Limited Was Changed To "Dhaka Stock Exchange Ltd."

At The Time Of Incorporation The Authorized Capital Of The Exchange Was Rs. 300000

Divided Into 150 Shares. Of Rs. 2000 each and by an extra ordinary general meeting adopted at

the extra ordinary general meeting held on 22.02.1964 the authorized capital of the exchange was

increased to Tk. 500000 divided into 250 shares of Tk. 2000 each. The paid up capital of the

exchange now stood at Tk.460000 dividend into 230 shares of Tk. 2000 each. However 35 shares

out of 230 shares were issued at TK. 80, 00,000 only per share of TK. 2000 with a premium of

TK. 79, 98,000.

Although incorporated in 1954, the formal trading was started in 1956 at Narayanganj after

obtaining the certificates of commencement of business. But in 1958 it was shifted to Dhaka and

started functioning at the Narayangonj chamber building in Motijheel C/A.

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On 1.10.1957 the stock exchange purchase a land measuring 8.75 Kattah at 9F Motijheel C/A

from the Government and shifted the stock Exchange to its own location in 1959.

2.4.2 Listed Companies in DSE at October 2010:

Number of listed companies in Dhaka Stock Exchange

Year Number of listed

companies

Growth in %

Year Number of listed

companies

Growth in %

1990-91 149 1999-00 229 4.566

1991-92 153 2.685 2000-01 234 2.183

1992-93 166 8.497 2001-02 248 5.983

1993-94 201 21.084 2002-03 251 1.210

1994-95 192 -4.478 2003-04 259 3.187

1995-96 192 6.771 2004-05 251 -3.089

1996-97 203 5.729 2005-06 269 7.171

1997-98 213 4.926 2006-07 273 1.487

1998-99 219 2.817

Descriptive statistics of number of

listed companies

Mean Standard deviation

Minimum Maximum Average growth

rate

217.765 39.006 149.000 273.000 4.421%

Data source: Compiled from different issues of monthly review, DSE.

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Total company Listed at present: 442

Company Listing by Alphabetical Order Below:

 AB Bank Limited ACI Limited. ACI Formulations Limited ACI 20% Convertible Zero Coupon

Bonds Aftab Automobiles Agni Systems Ltd. Agrani Insurance Co. Ltd. Aims 1st M.F. Al-Haj

Textile Al-Arafah Islami Bank Ambee Pharma AMCL (Pran) Anwar Galvanizing Apex

Adelchi Footwear Ltd. Apex Foods Apex Spinning. Apex Tannery Aramit Aramit Cement

Asia Insurance Limited Asia Pacific General Insurance Co. Ltd. Atlas Bangladesh Aziz Pipes

Bangas Bank Asia Ltd. Bata ShoeBATBC Bay Leasing & Investment Limited BD.Autocars

BDCOM Online Ltd. Bangladesh Finance and Investment Co.Ltd Bangladesh Lamps Bd.Thai

Aluminium Bd. Welding Electrodes Beach Hatchery Ltd. Beacon Pharmaceuticals

LimitedBerger Paints Bangladesh Ltd. BEXIMCO BEXTEX Ltd. BGIC Bangladesh Industrial

Fin. Co. Ltd. BOC BangladeshBRAC Bank Ltd. BSCBSRM Steels Limited) Beximco Pharma

Beximco Synthetics

Central Insurance City Bank City General Insurance Co. Ltd. CMC KamalConfidence

CementContinental Insurance Ltd. Chittagong Vegetable

The Dacca Dyeing & Manufacturing Co.Ltd. Daffodil Computers Ltd. Delta Brac Housing

Finance Corp. Ltd. DBH First Mutual Fund Aramit Cement Ltd. Bangladesh Luggage Ind. Ltd.,

BD Welding Electrodes Ltd, Bangladesh Zipper Ind. Ltd. Beximco Denims Ltd. Beximco

Fisheries Ltd. Beximco Knitting Ltd. Beximco Textiles Ltd. Delta Life Insurance Delta Spinners

Ltd. Dhaka Electric Supply Company Ltd. Dhaka Bank Dhaka Insurance Limited Desh

Garmants Dulamia Cotton Dutch-Bangla Bank

Eastern Insurance Eastland Insurance Eastern Lubricants Eastern Bank EBL First Mutual Fund

Eastern Cables Eastern Housing Export Import (Exim) Bank of Bangladesh

FAREASTLIF (Fareast Islami Life Insurance Co. Ltd. )

Federal Insurance

Fidelity Assets & Securities Company Ltd Fine Foods Limited First Security Islami Bank

Limited First Lease Finance and Investment Ltd. Fu-Wang Ceramic Fu Wang Food

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Gemini Sea Food Glaxo SmithKline Global Insurance Ltd. Golden Son Ltd. Grameenphone

Ltd. GQBALLPEN (GQ Ball Pen Grameen Mutual Fund One Grameen One : Scheme Two

Green Delta Mutual Fund Green Delta Insurance

Hakkani Pulp & Paper

Heidelberg Cement Bd.

H.R.Textile

IBBL Mudaraba Perpetual Bond The Ibn Sina ICB ICB AMCL 1st NRB Mutual Fund ICB

AMCL 2nd NRB Mutual Fund ICB AMCL Third NRB Mutual Fund ICB AMCL 1st M.F.

ICB AMCL Second Mutual Fund ICB Employees Provident MF 1: Scheme 1 ICB Islamic

Bank Limited ICB AMCL Islamic Mutual Fund IDLC Finance Ltd. IFIC Bank IFIC Bank 1st

Mutual Fund International Leasing & Financial Serv.L Imam Button In Tech Online Ltd.

Industrial Prom. & Dev. Co. of BD Ltd. Islami Bank Islamic Finance & Investment Ltd. Islami

Insurance Bangladesh Limited Information Services Network

Jamuna Bank Ltd.

Jamuna Oil Company Limited

Janata Insurance

Jute Spinners

L

LAFARGE SURMA CEMENT LTD.

LankaBangla Finance ltd.

Legacy Footwear

Libra Infusions Limited

Makson Spinn Mills Limited Malek Spinning Mills Ltd. Marico Bangladesh Limited Meghna

Condensed Milk Meghna Cement Meghna Life Insurance Co. Ltd. Meghna Pet Industries

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Karnaphuli Insurance

Kay and Que

Keya Cosmetics

Keya Detergent

Kohinoor Chemicals

Khulna Power Company Limited

Mercantile Bank Ltd. Mercantile Insurance Co. Ltd. Metro Spinning MIDAS Financing Ltd.

Miracle Ind. Mithun Knitting Monno Ceramic Monno Jutex Monno Jute Stafflers Meghna

Petroleum Limited Mutual Trust Bank Ltd.

Ocean Containers Limited

Olympic Industries

One Bank Limited

Padma oil Company Ltd Paramount Insurance Company Ltd. Peoples Insurance Phoenix

Finance 1st Mutual Fund Pharma Aids Phoenix Insurance Phoenix Finance and Investments

Ltd. Pioneer Insurance Peoples Leasing and Fin. Services Ltd. Popular Life First Mutual Fund

Popular Life Insurance Co. Ltd. Power Grid Company of Bangladesh Ltd. Pragati Insurance

Pragati Life Insurance Ltd. The Premier Bank Ltd. Premier Leasing & Finance Limited Prime

Bank 1st ICB AMCL Mutual Fund Prime Bank Prime Finance & Investment Ltd. PRIME

INSURACE Prime Islami Life Insurance Ltd. Prime Textile Progressive Life Insurance Co.

Ltd. Provati Insurance Company Limited Pubali Bank Purabi Gen. Insurance

Quasem Drycells

Rahima Food Rahim Textile RAK Ceramics (Bangladesh) Limited Rangpur Foundry Reckitt

Benckiser(Bd.)Ltd. Reliance Insurance Renata Ltd. Republic Insurance Company Limited

R.N. Spinning Mills Limited Rupali Bank Rupali Insurance Rupali Life Insurance Company

Limited

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National Life Insurance

Navana CNG Limited

NBL

NCCBL

National Housing Fin. and Inv. Ltd.

Nitol Insurance Co. Ltd.

Northern General Insurance Company Ltd.

National Polymer

National Tea

National Tubes

Safko Spinnings Saiham Textile S. Alam Cold Rolled Steels Ltd. Samorita Hospital Sandhani

Life Insurance Summit Alliance Port Limited Savar Refractories Shahjalal Islami Bank Ltd.

Social Islami Bank Limited Singer Bangladesh Sinobangla Industries Sonali Aansh Sonar

Bangla Insurance Ltd. Sonargaon Textiles Southeast Bank Shinepukur Ceramics Limited

Square Textile Square Pharmaceuticals Ltd. Standard Ceramic Standard Insurance Limited

Standard Bank Limited Stylecraft Limited Summit Power Limited T05Y0715 – T5Y1214

United Commercial Bank Ltd.

United Leasing

Union Capital Limited

United Airways (BD) Ltd.

United Insurance

Usmania Glass

Uttara Bank

Uttara Finance

First Janata Bank Mutual Fund

1st Bangladesh Shilpa Rin Sangstha M.F. 1st ICB M.F.

Prime Finance First Mutual Fund 2nd ICB M.F. 3rd ICB M.F. 4th ICB M.F. 5th ICB M.F. 6th

ICB M.F.7thICB M.F. 8th ICB M.F.

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Chapter 3

About Dhaka Stock Exchange

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3.1 Board of Directors (At present ‘2010):

Name Office Address Residence Address   Photograph

Mr. Md. Shakil Rizvi

President, DSE

Room No: 905, DSE Annex Building (8th Floor) 9/E, Motijheel C/A,Dhaka-1000 Phone: 7175716, 9570985, 7166096, 7170993-4PABX :9564601, 7175705-9           Ext- 429

Mobile: 01715864740Email: rizvistock@yahoo.com

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Mr. Mohammed Nasir Uddin Chowdhury

Senior Vice-President, DSE

Room No.  322 9/E, Motijheel C/A, Dhaka-l000Phone: 9561868, 9570496, 7174256, 7174315Fax: 9555384, 9562207

Mobile : 01819-213180 Email: nasir@lbsbd.com          info@lbsbd.com  

Mr. Md. Rafiqul Islam

Vice-President, DSE

Room No - 901 (8ht floor) 9/E, Motijheel C/A, Dhaka-l000 Phone: 7175717, 7168960 PABX: 9564601  Ext-762 Fax: 9569917

Mobile: 01711-526213

Mr. Md. Rakibur Rahman

Director, DSE

Room No - 508 , Stock Exchange Building , 9/F , Motijheel C.A., Dhaka-1000 Ph: 9551960, 9559925,PABX : 9564601, 7175705-9            Ext. 508

Navana VillaFlat No. 201, Plot No. 10 Road No. 118 Gulshan, Dhaka Phone: 8823500, 9895837 Mobile: 01819-219396

Mr. Ahmed Iqbal Hasan

Director, DSE

Suite: 735 & 736, DSE Annex Building-1, 9/E, Motijheel Commercial Area, Dhaka-1000. Phone: 880-2-7168513, 7174449,7174369.

Phone: 9116517 Fax: 880-2-9555317 E-mail: aihsec@bol-online.com

Mr. Saiful Islam

Director, DSE

Suite No. 1002-3 9/E, Motijheel C/A,Dhaka-1000Phone: 9561070, 9561232, 9564959, 9569302Fax: 9562254, 9564991

Apartment 2B,House No.16,Road No. 01,Baridhara Diplomatic Zone,Dhaka-1212 Res: 8859055Mobile : 01711-546802

Mr. Md. Feroz Khan

Director, DSE

Room No - 313 (2nd Floor) Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9552390,9561667 PABX:9564601 Ext-313

Phone: 8810256 Mobile: 01711-548744

Mr. Khwaja Ghulam Rasul

Director, DSE

Room # 703, 704 (6th Floor), Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9550515, 9560948. PABX: 9564601, 7175705-9 Ext. 751 Fax: 880-2-9553907 E-mail: KGRasul@gmail.com,

195, Elephant RoadBara Moghbazar, Dhaka-1217 Ph: 9340616

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keslbd@yahoo.com

Mr. Sharif Ataur Rahman

Director, DSE

Swantex Court Building (2nd floor), 9/I, Motijheel C/A, Dhaka-1000.Phone: 9565899, 9565900, 9559265.PABX : 9564601, Ext :149.Fax : 88-02-9564619.E-mail : sar @yahoo.com

R# 6, H #14, Flat # 604,Gulshan -1, Dhaka-1212.  

Mr. Md. Shahjahan

Director, DSE

Room No - 213 Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9551403 PABX:9564601,7175705-09  Ext-213

Phone: 9882204Mobile: 01711 536876

Ms. Lailun Nahar Ekram

Director, DSE

House No. - 8A, Road No. - 50, Gulshan-2, Dhaka - 1212 Phone: 9887423, 9892714Fax: 9894877

House No. 14 (5th Floor), Road No.- 140, Gulshan - 01,Dhaka - 1212Res: 8855098Mobile : 01711-567122

Mr. Masudul Haque

Director, DSE

Suite No. - 603 (5th Floor), Modhumita Building, 158-160 Motijheel C/A, Dhaka-1000Phone: 7174368, 7174451,            9561993

116, Bashir Uddin Road, Kalabagan, Dhanmondi,Dhaka-1205Res: 9115571, 8144836Mobile : 01711-542131

3.2 DSE Management:

Chief Executive Officer Satipati Moitra, M.Com, FCMA

PABX : 9564601,7175705-9Email : satipati@dsebd.org, dse@bol-online.com

 

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Chief Operating OfficerBrig Gen Md Zahurul Alam, ndc, psc (on LPR)

Phone: 9564601,7175703-11, Ext-268Mobile: 01730700610, 01753747474Email : bgzahur@dsebd.org, bgzahur@yahoo.com

Chief Technology Officer A. S. M. Khairuzzaman M.Sc. in AP & Electronics, Commonwealth MBA, FBCS

Phone: 9564601,7175703-11, Ext-123Email : skzaman@dsebd.org, dse@bol-online.com, kzaman_bd@yahoo.com

General Manager & SecretaryShaikh Mohammadullah, MBA (IBA), FCS

Phone: 9564601,7175705-9, Ext-102Mobile: 01713333224Email : smullah@dsebd.org, dse@bol-online.com

 

General Manager (Finance & Accounts)

Jiban Chandra Das, FCA

Phone: 9564601,7175705-9, Ext-152Mobile: 01730336965Email : jiban@dsebd.org, dse@bol-online.com

 

3.3 Function of Dhaka Stock Exchange :

The major functions are:

- Listing of Companies. (As per Listing Regulations).

- Providing the screen based automated trading of listed Securities.

- Settlement of trading.(As per Settlement of Transaction Regulations)

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- Gifting of share / granting approval to the transaction/transfer of share outside the

trading     system of the exchange (As per Listing Regulations 42)

- Market Administration & Control.

- Market Surveillance.

- Publication of Monthly Review.

- Monitoring the activities of listed companies. (As per Listing Regulations).

- Investors grievance Cell (Disposal of complaint by laws 1997).

- Investors Protection Fund (As per investor protection fund Regulations 1999)

- Announcement of Price sensitive or other information about listed companies

through  online.

3.4 Legal Status:

The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and

its activities are regulated by its Articles of Association rules & regulations and

bye-laws along with the Securities and Exchange Ordinance, 1969, Companies Act

1994 & Securities & Exchange Commission Act, 1993

3.5 DSE Indices:

Algorithm of DSE Indices :

Index Calculation Algorithm (according to IOSCO Index Methodology):

 

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                                 Yesterday's Closing Index X Current M.CapCurrent Index = --------------------------------------------------------------                    Opening M.Cap

                               Yesterday's Closing Index X Closing M.CapClosing Index = --------------------------------------------------------------                    Opening M.Cap

Current M.Cap = ∑ (LTP X Total no. of indexed shares)Closing M.Cap = ∑ (CP X Total no. of indexed shar

There are three indices in the DSE as follows:

Sl.No Index Name Base Index Remarks

1 DSI (all shares) 350 (as on 01-11-1993)  

2DGEN (A, B, G & N)

817.63704 (as on 24-11-2001)SEC directive regarding index was on 17-11-2001

3 DS20 1000 (as on 01-01-2001)  

 Abbreviations and Acronyms:

M. CAP – Market Capitalization

DSE – Dhaka Stock Exchange. IOSCO – International organization of Securities Exchange Commission. LTP – Last Trade Price. CP – Close Price

DSE General Indices: It’s continuing on all the listed companies in Dhaka

Stock Exchange.

DSE 20 Indices: DSE choose 2o shares of every month by the company’s financial performance, change of share price with good handover of that share volume.

3.6 What is DSE Trading?

Dhaka Stock Market Trading is the process of buying and selling of company stocks or shares. It

is also known as Equity Trading. A stock market is a market where securities like company stock

and derivatives of company stock are traded. These securities are listed on a Stock Exchange.

The stock market can be categorized into two parts

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I. The Primary Market: The primary market deals with offering of new issues (Initial

Public Offers or IPOs).

II. The Secondary Market: The secondary market deals with subsequent trading of the

shares after the IPO is made. There is no involvement of the issuing company. When

people talk about stock markets, they refer to the secondary market.

There is a wide range of investors in the stock market from small individual stock

investors to large hedge fund traders coming from different locations. They place their orders to

a professional in the stock exchange that is responsible for

executing the order.

Some exchanges are physical locations where the transactions are executed on a trading floor.

The method used in this kind of transactions is called open outcry. Only those stock exchanges

and commodity exchanges use this type of auction where traders can simultaneously place verbal

bids and offers.

Another type of exchange is there which a virtual kind of exchange is. This exchange is made up

of a computer network. In this type of exchanges, trading is done electronically through traders

at computer terminals.

3.6.1DSE Trading Day: Normal trading schedule of DSE is Sunday to Thursday except Government holidays.

3.6.2 DSE Trading Period: The trading period of DSE is now a day is 11am- 3pm.

3.6.3 DSE Trading Sessions: TESA conducts trading in-4-phases.

Enquiry: In this session Brokers can logon to the system. No order will be submitted in

this session. No trade will be executed. Only previous orders can be withdrew in this session

Opening: The Opening is a pure, single-price auction. All buy and all sell orders are

compared and calculate the open-adjust price. No trades will be executed in this session

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Continuous Trading: During this phase, participants enter orders and immediate

execution or for inclusion in the book. Automatic matching and execution takes place based on

best price/ first in, first out trading rules

Enquiry: Closing prices are calculated and disseminated to market participant. Market

will be closed in this session & other facilities like the previous enquiry session.

3.6.4 Qualifications for Trading

(1) A member shall qualify himself for trading if he -

(a) obtains a registration certificate from the Commission issued under regulation 5(4) of

the Securities and Exchange Commission (Stock-Dealer, Stock-Broker and Authorized

Representative) Regulations, 1994;

(b) becomes a member of the DSE Clearing House;

(c) is not otherwise barred by DSE or SEC under any law, rule or regulations for the time being

in force for trading.

(2) The DSE shall notify the name and other necessary particulars of a member whenever he

incurs a disqualification for trading or becomes otherwise ineligible for trading.

3.7 Types of Transactions:

Orders may be grouped or categorized based on the following, namely:-

(a) Price;

1(b) Volume; and

2(c) Validity.

Based on price, orders may be of the following categories, namely:

Limit order - Limit order must have a price limit which ensures that the order

shall be traded at the price equal to or better than the limit price.

Market order - Market order is the order to be executed at the touchline price. A

market order is matched immediately on arrival in to the trading engine at the touchline

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price. To avoid the possibility of the market order being matched at ridiculous rate, this is

protected by a price protection percentage as determined by the Council. If there is no

touchline price then the market order shall be rejected.

Based on volume, orders may be of the following categories, namely:-

Partial fill - A partial fill (PF) order signifies that as much possible of the order

quantity shall be executed as soon as the order is submitted to the trading engine. If the order is

not fully executed the remaining order quantity shall be stored which shall be visible to the

market.

Partial fill and kill - A partial fill and kill (PFAK) order signifies that as much as

possible of the order quantity shall be executed as soon as the order is submitted

and the remaining order quantity shall be returned to the trader who entered the

order.

Full fill or kill - A full-fill or kill (FOK) order signifies that either all of the orders

quantity shall be executed as soon as the order is submitted to the trading engine

or the entire order shall be rejected and returned to the trader.

Based on validity, orders may be of the following categories, namely:-

Good till day - By default, all orders shall be valid till the end of the current trading day.

Good till date - The trader can specify the date till which the order should remain active in the

market. The order validity date can be a date which is up to a maximum of thirty days from the

current trading date.

3.8 Order Withdrawals: The trader can withdraw his orders anytime before execution.

3.9 The Clearing and Settlement: The Clearing and Settlement module provides the

management of trade from the point of entry into the Settlement Pool trade database until it has

been delivered, settled and removed from the Settlement Pool. It consists of three major business

processes.

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Clearing: participant trade reporting, affirmation, billing and assigning settlement instructions.

Settlement: the process of overseeing that delivery of all instruments to the buyer and payment

of all moneys to the seller has occurred before removing the trade from the settlement pool.

Regulation 4 of the Settlement of Stock Exchange Transactions Regulation 1998 has been given

effect time to time. A new directive was made by SEC dated on 18th March 2003 "Adjusted due

position mechanism for settlement of scrip only as provided by regulation 4(1) of settlement of

Stock Exchange Transaction Regulations, 1998 shall remain suspended from 19th March 2003

until further order".

Here is a complete picture of the settlement system for all of our 427 Instruments in Five (5)

groups in the Four (4) markets.

A Group: Number of Instruments are 338 (150 + 8D + 22M + 158TB), Here D for Debentures,

M for Mutual funds & TB for Treasury Bonds (Trading in Public, Block & Odd-lot Market with

trade for trade settlement facility for scrip only through DSE Clearing House on T+1, T+3 basis).

"A" and "DA" are marked in BASES columns for Non-Demat & Demat instrument respectively

in our TESA Trading Software.

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The above cycle is valid for A, B, G & N category instruments traded in Public, Block & Odd-lot

market.

B Group: Number of Instruments are 44(Trading in Public, Block & Odd-lot Market with trade

for trade settlement facility through DSE Clearing House on T+1, T+3 basis). "B" and "DB" are

marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA

Trading software.

G Group: Number of Instrument is 0 (Trading in Public, Block & Odd-lot Market with trade for

trade settlement facility through DSE Clearing House on T+1, T+3 basis). "G" and "DG" are

marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA

Trading software.

N Group: Number of Instrument is 11(Trading in Public, Block & Odd-lot Market with trade for

trade settlement facility through DSE Clearing House on T+1, T+3 basis). "N" and "DN" are

marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA

Trading software.

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Z Group: Number of Instruments are 34(Trading in Public, Block & Odd-lot Market with trade

for trade settlement facility through DSE Clearing House on T+1, T+9 basis). "Z" and "DZ" are

marked in BASES columns for Non-Demat & Demat instrument respectively in our TESA

Trading software.

This cycle is valid only for Z group instruments traded in Public, Block & Odd-lot market.

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Instruments Of All Groups Traded In Spot Market:

The above cycle is valid for A, B, G, N & Z category instruments traded in spot market.

Instruments of Foreign Trades (DVP) Of All Groups:

The above cycle is valid for A, B, G, N & Z category instruments of foreign trade.

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Remarks:

* If any instrument declared as Compulsory Spot then Trades of Block and Odd-lot market of

that Instrument will be settled like Spot Market.

* Howla Charge, Laga Charge & Tax are always payable to DSE at Pay-In date for both

Buyer and Seller traded in Public, Block & Odd-lot Market.

* Howla Charge, Laga Charge & Tax are always payable to DSE at T+1 day for both Buyer

and Seller traded in Spot Market.

* Outside-Of-Netted settlement for "A" Group instrument has been withdrawn from 10th Dec

2006.

* DVP Trades are Off-Market Settlement (Broker to Broker).

3.10 Settlements for Different Categories Instruments:

 

01) For A group Instruments:

Market name                       Trade for Trade System          Settlement & Settlement Period

Public Trade for Trade *  T+1 & T+3

Odd + Block Trade for Trade  T+1 & T+3

Spot Trade for Trade T+0 & T+1

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02) For B group Instruments:

Market name                        Trade for Trade System           Settlement & Settlement Period

Public Trade for Trade *  T+1 & T+3

Odd + Block Trade for Trade  T+1 & T+3

Spot (Before Book-

closer)Trade for Trade T+0 & T+1

03) For G group Instruments:

Market name                        Trade for Trade System           Settlement & Settlement Period

 

Public Trade for Trade *  T+1 & T+3

Odd + Block Trade for Trade  T+1 & T+3

Spot (Before Book-

closer)Trade for Trade T+0 & T+1

04) For N group Instruments:

Market name                        Trade for Trade System           Settlement & Settlement Period

Public Trade for Trade *  T+1 & T+3

Odd + Block Trade for Trade  T+1 & T+3

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Spot (Before Book-

closer)Trade for Trade T+0 & T+1

* As netting system for shares has withdrawn, for A, B, G & N group instrument, member will

have to deposit the full shares at the DSE on T+1 after selling the shares, In case of purchasing

such shares, the buyer will have to deposit the Balanced (Netted) money traded in Public, Block

& Odd-lot market at the DSE on T+1.

05) For Z group Instruments:

Market name                        Trade for Trade System           Settlement & Settlement Period

Public Trade for Trade *  T+1 & T+9

Odd + Block Trade for Trade  T+1 & T+9

Spot (Before Book-

closer)Trade for Trade T+0 & T+1

** Under the Trade for trade settlement system, member will have to deposit the full money at

the DSE on T+1 after purchasing the shares, In case of selling such shares, the seller will have to

deposit the full shares at the DSE on T+9.

DEMATE SHARE:

All selling shares have to transfer (Pay in) to the clearing account of selling Brokers from

concerned BO account within settlement period. Regarding the cash payment the procedure will

remain unchanged as mentioned above.

3.11 Settlements:

The settlement of all trading shall be made in accordance with the provisions of the rules

Or regulations made in this behalf by DSE for the time being in force

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3.11.1 General:

(1) A member shall be responsible for all orders entered from his trading workstation.

(2) Transaction fee(s) shall be charged and realized by DSE from the members concerned

upon execution of order(s) as specified by DSE.

(3) The Council may issue guidelines and clarifications from time to time for removal of

any difficulty in the execution or operation of these regulations under immediate

intimation to SEC.

(4) The terms and phrases used herein without a specific definition shall have the

meaning in accordance with the other relevant rules, regulations and current trade

practices in these behalf.

(5) Any determination made by the system through an interactive process shall be

conclusive

 

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Chapter 4

DSE Automated Trading System

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4.1 Preamble

Globally the developments in information & communication technologies (ICT) have created a

new instance in the securities market operations. Stock Exchanges all over the world have

realized the potentiality of ICT and inclined to the electronic trading systems. It was understood

by DSE that technology would ensure transparency, timeliness and satisfaction in customer

service. Considering those DSE introduced Automated Trading System on 10th August 1998.In

other words, the trading floor moved right into the member's office premises where an investor

started to place buy/sell orders.

Considering market growth the Automated Trading System was upgraded two times. The

recently Upgraded Trading System was started from 21st December, 2008.

4.2 Hardware

DSE Automated Trading System (HP Nonstop S7806) is running on fault tolerant, high

available, scalable and maintainable Mainframe Server. Previously DSE established the

TANDEM Nonstop K204 System on September 1998 and on August 2005 it was replaced with

highly scaleable HP Nonstop S7802.

DSE upgraded the Trading System again on 21st December, 2008. The existing HP Nonstop

S7806 Server is highly fault tolerant to the fact that no single component failure will halt the

system. Its constituent parts are hot swappable and upward compatible; components can be

added or removed while the system is running and any compatible new upgraded will work with

the system.

All disk drives are mirrored so, if any of the disk crashes the exact copy of the data is available at

online. Moreover the connecting path for every disk whether it is primary or mirror is also

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redundant. In every case, minimum two peripheral devices exist. All the components are working

active - active load balancing procedure. To ensure better power quality we have ensured high

end UPS's with long durable backup capability, two instant backup generations and other

electrical devices.

4.3 Network (LAN / WAN)

The entire Member (238 members) Server Applications (MSA) are connected with Nonstop HP

S-Series Server through either DSE LAN or WAN connectivity. Each member has one or more

Trader Work Station (TWS). The TWSs are being connected to the Trading Server via respective

MSA through LAN and WAN connection.

DSE outsourced Metro Net Ltd., DNS Ltd., X-Net Ltd., Dhaka Com Ltd., Ranks ITT, Link-3,

Royal Green Online Ltd. etc Network Service Providers (NSP under WAN Expansion Project).

Now a day’s member can establish a main office or branch offices to their remote location and

can trade smoothly by using different media ADSL, Optical fiber and Radio Link from Dhaka

and other important cities such as Gazipur, Narayanganj, Comilla, Hobiganj, Chittagong, Sylhet,

Khulna, Barisal, Rajshahi, Bogra at the same time.

Three DSE branch offices located at Chittagong, Sylhet and Khulna are connected via BTTB's

DDN link. We also used connectivity for redundancy for the DDN link. We have a plan to reach

the DSE branches in same way.

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DSE LAN/WAN Expansion within Dhaka City

DSE LAN/WAN Expansion outside of Dhaka City

In case of trade interruption due to serious hardware, software, network failure or

telecommunication disruption at the Brokerage houses, there is a provision to allow traders to

trade at DSE Contingency Trading floor.

4.3.1 System Software

The system software is HP Proprietary Nonstop KERNEL and includes the database as

part of the operating system thereby eliminating the layer typically found in most

Database Management Systems (DBMS). The Database functionalities are handled by

NONSTOP SQL, which is simply a different operational session for the operating

system. The proprietary nature of the system software arguably enhances system security.

Operating system is HP's proprietary Nonstop Kernel DBMS handled by Nonstop SQL.

The system software treats all its hardware resources as objects and is thus entirely

message driven. This then allows application software to be deployed using client / server

architecture providing shared data processing between the central server and the user

workstation. The central trading system resides in the Stock Exchange premises, which is

running 24 hrs in a day & 365 days in a year.

 

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4.3.2 Application Software

The application, which runs in DSE for trading, is called TESA (The Electronic Securities

Architecture). TESA has two parts: MSA (Member's Server Application) & TWS (Trader

workstation). MSA is the "Gateway" between the traders and the Stock Exchange, which

manages all the transactions and database operations between the traders and the Trading Engine.

TWS is the Front-end Application closer to investors, where they can submit Buy/Sell orders for

their desired securities

TESA (The Electronics Securities Architecture) is the Trading software (Based on HP

proprietary O/S & DBMS)

It has developed in view of Distributed Database system

In the client site it is being using SQL as local Database

Trading Software is MSA & TWS

In STSD (Signal trader Single Database) system both MSA & TWS are running on a Windows

2k Professional /XP Professional workstation and for MTSD (Multiple trader Single Database)

MSA install in a Windows 2k Server & the TWSs are in different Windows 2k Professional /XP

Professional workstation-using members in house LAN

A. TESA : TESA (The Electronics Securities Architecture) is the Trading software

(Based on HP proprietary O/S & DBMS)

B. TESA Architecture: TESA software is built for the global securities markets. It

uses fault tolerant computers, intelligent workstations and client / server design

techniques. This provides co-operative processing, high message integrity,

continuous operation and fully automatic recovery. This co-operative mechanism

enables very high speed processing which is essential for today's electronic

markets.

TESA's Application Programmatic Interface (API) is the gateway to the TESA

system from the outside world. All external devices connect through the API. The

API provides the translation between external devices and internal processes. This

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means that a new process does not need to be written to support each new device,

only the API needs to be modified.

C. Solution Benefits :

The TESA application suite derives significant advantages from being implemented on the HP

Nonstop platform. The HP Nonstop customers have benefited from these advantages.

Fault Tolerance: One of the most important automation requirements for any stock exchange

system is continuous system availability. With most systems Fault Tolerance is created at the

application level. Fault Tolerance is a fundamental design feature of the HP Nonstop

architecture.

Data Integrity: Data integrity is an integral feature of HP architecture. TESA employs standard

HP tools to achieve exceptional data integrity.

Scalability: The ability of an exchange to accommodate extraordinary increases in transaction

volumes without loss of its Capital investment in automation is very important. The HP Nonstop

Server is massively scalable due to Parallel processors.

D. TESA Functional Model :

An overview of the TESA Functional Model

Client / Server: TESA's Client / Server architecture enables an efficient allocation of computing

resources and provides easily modified user-friendly interfaces. TESA workstations operate

under Windows 2K/ XP professional and can function either as servers on a broker's network or

as workstation. These are used to perform trading and settlement activity by the brokers.

E. Principle Function of TESA

Market Information: Supplying all market information needed to formulate the buy and sell

decisions.

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Order Management: Accept, validate and store orders and quotes from broker workstations and

/ or systems.

Order Execution: Automatically executes orders when buy and sell prices match.

Trade Reporting: Trade execution reports are provided to each trade participant, to the

settlement system and / or the depository and to the market.

Index Calculation: Calculates and publishes market indices (DSE General Index & Weighted

Average Index.)

Market Access: Provide exchange members with efficient affordable GUI-based tools for

accessing the market.

F. Markets

Four types of market at DSE

Public Market: In this market instruments are traded in normal volume

Spot Market: Instruments are traded in normal volumes under corporate action if any

Odd lot Market: Odd lots of all Instruments are trade in this market

Block Market: Instruments are traded in bulk volume

G. Market Control :

The Market Control Workstation allows the exchange administrative staff to control the

operation of the market, e.g.

Session Control: Opening and closing the market via interactive control or by preset timers.

Validation Parameters: Setting and viewing parameters that control the trading engine

validation e.g. tick size, Circuit Breaker, Circuit Filter, Market lot, Price protection Percentage.

Messaging: Allows the dissemination of company announcement data and general market

administrative massages.

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H. Market Information: Market Information is a real-time market data system. It

collects, manages, generates and stores information relating to trade instruments

and issuing companies. Market Information is responsible for,

Collecting Real-Time Market Information: Bids, offers, last sale (i.e. most recent trade price

and volume), book and other data are gathered via the Trading engine. It supports TESA's

automated and manual trading modules and can process the trades of external and off-market

systems.

Collecting company Information: All information supplied by the listed companies are

maintained in the TESA database.

Generating Market Statistics: TESA generates market indices on a real time basis. It generates

other statistical information such as Price.

I.  Broker Support :

Research and Enquiry: this module provides brokers access to the local Broker Support and

TESA databases for enquiries and research purposes.

Public Order Book

Broker Order Book

The multi-windows environment allows users to simultaneously view orders, market and trades.

Broker Support offers Stock Exchange members two configurations; standalone and multi-user.

Both configurations maintain a database consisting of information generated by the TESA Server

and the local system.

4.4 Surveillance

The main objective of the Surveillance function of the Exchange is to promote market integrity

in two ways -

By monitoring price and volume movements (volatility) as well as by detecting potential

market abuses at a nascent stage, with a view to minimizing the ability of the market

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participants to influence the price of the scrip/scrip’s in the absence of any meaningful

information.

By managing default risk by taking necessary actions timely.

 Market Abuse is a broad term which includes abnormal price/volume movement, artificial

transactions, false or misleading impressions, insider trading, etc. In order to detect aberrant

behavior/ movement, it is necessary to know the normal market behavior -

The department carries out investigation, if necessary, based on the preliminary

examination/analysis and suitable actions are taken against members involved based on the

investigation.

All the instruments traded in the market come under the Surveillance umbrella of DSE.

Surveillance activities at the Exchange are divided broadly into two major segments -

Price Monitoring: Price monitoring is manly related to the price movement/ abnormal

fluctuation in prices or volumes etc.

Position Monitoring: The position monitoring relates mainly to abnormal positions of

members, etc. in order to manage default risk.

Price Monitoring :

The functioning of the Price Monitoring is broadly divided into following activities -

On line Surveillance

One of the most important tools of the Surveillance is the On-line Real Time Surveillance system

with main objectives of detecting potential market abuses at a nascent stage to reduce the ability

of the market participants to unduly influence the price and volumes of the scrips traded at the

Exchange, improve the risk management system and strengthen the self regulatory mechanism at

the Exchange. The system provides facility to access trades and orders of members.

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 Off-Line Surveillance

The Off-Line Surveillance system comprises of the various reports based on different parameters

and scrutiny thereof -

High/ Low Difference in prices

% change in prices over a week/ fortnight/ month

Top N scrip’s by Turnover over a week/ fortnight/ month

Top N scrip’s by Volume over a week/ fortnight/ month

Trading in infrequently traded scrip’s

Scrip’s hitting New High / Low etc.

The Surveillance actions or investigations are initiated in the scrip’s identified from the above-

stated reports.

 Investigations

Conducting in-depth investigations based on preliminary enquiries/analysis made into trading of

the scrip. In case of irregularities observed, necessary actions are initiated or investigation case

forwarded to SEC, if necessary through the CEO.

 Surveillance Actions

Warning to Members

The department may issue verbal/ written warning to member/s when market

irregularities in the scrip are suspected.

Imposition of penalty/ suspension

The department, through the CEO, imposes penalty or suspend the member/s who are

involved in market irregularities, based on the input/ evidence available from

investigation report.

 Rumor verification

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Liaising with Compliance Officers of companies to obtain comments of the company on

various price sensitive corporate news items appearing in selected News Papers.

Comments received from the companies are disseminated to the market by way of online

news bulletin.

Investigations based on rumor verifications are carried out, if required, to detect cases of

suspected insider trading.

Position Monitoring :

The Surveillance Department closely monitors outstanding exposure of members on a daily

basis. For this purpose, it observes various off-line and on-line market monitoring reports. The

reports are scrutinized to ascertain whether there is excessive purchase or sale position build up

compared to the normal business of the member, whether there are concentrated purchases or

sales, whether the purchases have been made by inactive or financially weak members and even

the quality of scrip’s is considered to assess the quality of exposure.

The following key areas are examined to assess the market risk involved - 

Online monitoring of Brokers Position

Surveillance closely monitors broker’s gross turnover exposure for ensuring margin calls in time.

B/S Statement of Trading Members

Scrutinizing the statement on daily basis. It is for keeping a watch on the exposure of the

members & ascertains the quality of exposures. A detailed report on the net outstanding positions

of top purchasers and top sellers in individual scrip’s, is prepared, if considered necessary.

 Concentrated B/S

It is considered a risky issue. In case, such a situation is noticed, fundamentals of the scrip’s,

their daily turnover, and their nature of transactions are ascertained. Thereafter, based on the

market risk perception appropriate surveillance actions are taken.

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 B/S of scrip’s having thin trading

It is closely scrutinized as comparatively high market risk is involved in trading in such scrip’s.

Details of trades in such scrip’s, if necessary, are called from members to assess the market risk

involved & decide on the appropriate surveillance action.

 Verification of Institutional Trade

The institutional trades executed by the trading members are verified to ascertain the

genuineness of trades.

 Verification of Foreign Trade

The foreign trades executed by the trading members are verified to ascertain the genuineness of

trades.

Verification of Cross Reporting Trade

The report crossing trades executed by the trading members are verified to ascertain the

genuineness of trades.

Verification of Dealers own trades

Trades executed by the trading members (Dealers) are verified to ascertain the genuineness of

trades.

Verification of Sponsor's Trade

The Sponsors trades executed by the trading members are verified to ascertain the genuineness of

trades. 

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Snap Investigation

To carry out, wherever considered necessary, preliminary investigation of certain dealings to

verify irregularities. Further actions, viz., referring the case for detailed investigation, referring

the case to the Sec, depending on the findings of preliminary investigation.

 Market Intelligence

The rumors floating in the market are verified with the data available with DSE, Newspapers,

Television news channels & Reuters to ascertain the national & global factors affecting the

market sentiments. This enables the Exchange to avert market problems before it causes a

serious damage.

 Review Block Trades

To determine -

Whether the block was executed at a price, even if at a discount or premium which was in

line with other trading of the stock.

Whether there was any news on the company which caused the price increase or decrease

subsequent to the block transaction.

 Review List of Settlement Failures

To identify -

broker/s with frequent failures

A particular stock with a pattern.

 Verify Company Accounts

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To scrutinize company announcements, company reports, auditors qualifications & other notes

of special interests in the published accounts of such company.

 Review Media Information

To scrutinize press articles or other media on the daily basis, the news relevant to the share prices

of companies.

 Monitoring on Newly Listed Stock

To review all activities of a newly listed stock for the first 1 / 2 weeks to identify any abnormal

deal.

 Develop Good Liaison

To develop & maintain good liaison with staff members of SEC & listed companies & member

firms as well.

 Develop market contacts & to pick up Intelligence.

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Chapter 5

Rules and Regulations of DSE

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5.1 Corporate Governance Guidelines

SECURITIES AND EXCHANGE COMMISSION

Jiban Bima Tower 10, Dilkusha (15th, 16th and 20th Floor)

Dhaka-1000

NOTIFICATION

Dated the 20th February, 2006

No. SEC/CMRRCD/2006-158/Admin/02-08: Whereas, the Securities and Exchange

Commission (herein after referred to as the "Commission') deems it fit that the consent already

accorded by the Commission, or deemed to have been accorded by it, or to be accorded by it in

future, to the issue of capital by the companies listed with any stock exchange in Bangladesh,

should be subject to certain further conditions, on 'comply or explain' basis, in order to enhance

corporate governance in the interest of investors and the capital market;

Now, therefore, in exercise of the power conferred by section 2CC of the Securities and

Exchange Ordinance, 1969 (XVII of 1969), the Commission hereby supersedes its earlier Order

No. SEC/CMRRCD/2006-158/Admin/02-06 dated the 9th January, 2006 and imposes the

following further conditions to the consent already accorded by it, or deemed to have been

accorded by it or to be accorded by it in future, to the issue of capital by the companies listed

with any stock exchange in Bangladesh:

Provided, however, that these conditions are imposed on 'comply or explain’ basis. The

companies listed with any stock exchange in Bangladesh should comply with these conditions or

shall explain the reasons for non-compliance in accordance with the condition No.5.

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The Conditions:

1.00 BOARD OF DIRECTORS:

 

1.1. Board's Size

 

The number of the board members of the company should not be less than 5

(five) and more than 20 (twenty):

Provided, however, that in the case of banks and non-bank financial institutions,

insurance companies and statutory bodies for which separate primary regulators

like Bangladesh Bank, Department of Insurance etc. exist, the Board of those

companies should be constituted as may be prescribed by such primary

regulators in so far as those prescriptions are not inconsistent with the aforesaid

condition.

1.2. Independent Directors

  All companies should encourage effective representation of independent

directors on their Board of Directors so that the Board, as a group, includes core

competencies considered relevant in the context of each company. For this

purpose, the companies should comply with the following:-

(i) At least one tenth (1/10) of the total number of the company's board of

directors, subject to a minimum of one, should be independent directors.

Explanation: For the purpose of this clause "independent director" means a

director who does not hold any share in the company or who holds less than one

percent (1%) shares of the total paid-up shares of the company, who is not

connected with the company's promoters or directors or shareholder who holds

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one percent (1%) or more than one percent (1%) shares of the total paid-up

shares of the company on the basis of family relationship; who does not have

any other relationship, whether pecuniary or otherwise, with the company or its

subsidiary/associated companies, who is not a member, director or officer of any

stock exchange, and who is not a shareholder, director or officer of any member

of stock exchange or an intermediary of the capital market.

(ii) The independent director(s) should be appointed by the elected directors.

1.3. Chairman  of the Board and Chief Executive

 

The positions of the Chairman of the Board and the Chief Executive Officer of

the companies should preferably be filled by different individuals. The

Chairman of the company should be elected from among the directors of the

company. The Board of Directors should clearly define respective roles and

responsibilities of the Chairman and the Chief Executive Officer.

1.4. The Director's Report to Shareholders

2.00CHIEF FINANCIAL OFFICER (CFO), HEAD OF INTERNAL AUDIT, 

AND COMPANY SECRETARY

2.1 Appointment 

 

The company should appoint a Chief Financial Officer (CFO), a Head of

Internal Audit and a Company Secretary. The Board of Directors should clearly

define respective roles, responsibilities and duties of the CFO, the Head of

Internal Audit and the Company Secretary.  

2.2 Requirement to Attend Board Meetings

  The CFO and the Company Secretary of the companies should attend meetings

of the Board of Directors, provided that the CFO and/or the Company Secretary

51 | P a g e

should not attend such part of a meeting of the Board of Directors which

involves consideration of an agenda item relating to the CFO and/or the

Company Secretary.

3.00 AUDIT  COMMITTEE:

 

The company should have an Audit Committee as a sub-committee of the Board

of Directors.

The Audit Committee should assist the Board of Directors in ensuring that the

financial statements reflect true and fair view of the state of affairs of the

company and in ensuring a good monitoring system within the business.

The Audit Committee shall be responsible to the Board of Directors. The duties

of the Audit Committee should be clearly set forth in writing.

3.1 Constitution  of Audit Committee

 

(i) The Audit Committee should be composed of at least 3 (three) members.

(ii) The Board of Directors should appoint members of the Audit Committee

who should be directors of the company and should include at least one

independent director.

(iii) When the term of service of the Committee members expires or there is

any circumstance causing any Committee member to be unable to hold office

until expiration of the term of service, thus making the number of the

Committee members to be lower than the prescribed number of 3 (three)

persons, the Board of Directors should appoint the new Committee member(s)

to fill up the vacancy(ies) immediately or not later than 1 (one) month from the

date of vacancy(ies) in the Committee to ensure continuity of the performance

of work of the Audit Committee.

3.2 Chairman of the Audit Committee 

  (i) The Board of Directors should select 1 (one) member of the Audit Committee

52 | P a g e

to be Chairman of the Audit Committee.

(ii) The Chairman of the audit committee should have a professional

qualification or knowledge, understanding and experience in accounting or

finance.

3.3 Reporting of the Audit Committee 

3.3.1Reporting to the Board of Directors

 

(i) The Audit Committee should report on its activities to the Board of Directors.

(ii) The Audit Committee should immediately report to the Board of Directors

on the following findings, if any:-

(a) Report on conflicts of interests;

(b) Suspected or presumed fraud or irregularity or material defect in the

internal control      system;

(c) Suspected infringement of laws, including securities related laws, rules

and      regulations; and

(d) Any other matter which should be disclosed to the Board of Directors

immediately.

3.3.2Reporting to the Authorities

 

If the Audit Committee has reported to the Board of Directors about anything

which has material impact on the financial condition and results of operation and

has discussed with the Board of Directors and the management that any

rectification is necessary and if the Audit Committee finds that such rectification

has been unreasonably ignored, the Audit Committee should report such finding

to the Commission, upon reporting of such matters to the Board of Directors for

three times or completion of a period of 9 (nine) months from the date of first

reporting to the Board of Directors, whichever is earlier.

 

53 | P a g e

3.4 Reporting to the Shareholders and General Investors

 

Report on activities carried out by the Audit Committee, including any report

made to the Board of Directors under condition 3.3.1 (ii) above during the year,

should be signed by the Chairman of the Audit Committee and disclosed in the

annual report of the issuer company.

   

4.00 EXTERNAL / STATUTORY AUDITORS

 

The issuer company should not engage its external/statutory auditors to perform

the following services of the company; namely:-

(i) Appraisal or valuation services or fairness opinions;

(ii) Financial information systems design and implementation;

(iii) Book-keeping or other services related to the accounting records or financial

statements;

(iv) Broker-dealer services;

(v) Actuarial services;

(vi) Internal audit services; and

(vii) Any other service that the Audit Committee determines.

5.00 REPORTING THE COMPLI ANCE  IN THE DIRECTOR'S REPORT

The directors of the company shall state, in accordance with the annexure

attached, in the directors' report whether the company has complied with these

conditions.

54 | P a g e

5.2 Market at a Glance

Years 2006 2007 2008 2009

Listed Issues

No. of Securities 310 350 412 443

% of Annual Growth 8.39 12.9 17.71 7.52

No. of Securities in mn 1546.05 2081.00 2759.00 3136.00

% of Annual Growth 24.27 21.83 32.58 13.66

Issued Capital & Debentures

Tk. mn 118437 214472 372156 457944

US$ mn 1711.52 3127.33 5409.24 6634.95

% of Annual Growth 68.44 81.09 73.52 23.05

Market Capitalization

-Tk. mn 323367.94   742195.87 1059530 1312773

US$ mn 4672.95 10822.34 15400 19020.18

% of Annual Growth 38.74 135.28 42.76 23.90

Conversion Rate 69.2 68.58 68.80 69.02

Turnover of Listed Securities

Total Turnover

Volume in mn 797.77 2831.23 4605.38 3480.54

Value (Tk. mn) 65079.11   322867.07 667964.82 565038.22

Value (US$ mn) 1099.3 4707.89 9708.79 8186.59

% of Annual Growth 0.38 396.11 106.89 -15.41

Daily Average Transaction

Volume in mn   3.5   11.95   19.43   27.84

Value (Tk. mn)     285.43   1362.31 2818.42   4520.31

Value (, US$ mn).   4.82   19.86   40.97   65.49

% of Annual Growth 13.58 377.28 106.89 60.38

Initial Public Offering(IPO)

NO. of Public Issues   7 14 12 4

Size of Public Offer    

Tk. mn   1433.95   4638.13   3043.41   337.00

US$ mn     24.22 67.63   44.24   4.88

% of Annual Growth - 13.29 223.45 34.38 88.93

Size of Pre IPO Placement

55 | P a g e

Tk. mn   146.72   1540.00   800.00   60.00

-US$ mn   2.47   22.46   11.63   0.87

% of Annual Growth - 0.56 949.62 48.05 -92.50

Public Subscription

Tk. mn   15241.93   37937.06   37821.71   15477

US$ mn   257.46   553.18   549.73   224.24

% of Annual Growth --59.08 < (3.50) 148.90 0.30 59.08

** Up to June 2009

5.3 Investor Guide:

A. Procedure for Making Portfolio Investment by Foreign Investors

Foreigner investors and the Non Resident Bangladeshis (NRBs) can make investment into

our securities market from any corner of the world. To exercise the investment as

NRBs/foreigners, one must enter into an agreement with a brokerage house of their choice

along with anyone of the following institutions:

Authorized Dealer of Foreign Exchange

Custodian Bank

Merchant Bank (Portfolio Manager)

All NRBs/foreigners for the purpose of making investment in our market have to have a

Beneficiary Owners (BO) account and a client account opened with any of the brokerage house

as well as entering into agreement with the Authorized Dealer or Custodian Bank or Portfolio

Manager and thus maintain the investment activities from abroad. List of Brokers together with

regular market scenario, fundamental status of the companies listed on the Exchanges and many

other relevant necessary information would be available at the website of DSE (www.dsebd.org).

List of Brokers of the Exchanges, Merchant Bankers or Custodian Banks would be available at

the web page of SEC

B. Opportunity for Foreign Investors :

56 | P a g e

Bangladesh has adopted a very liberal industrial policy to attract foreign investment

- No limitations pertaining to equity participation i.e. up to 100 percent foreign private

investment allowed.

- Except five reserve sectors, all industries are open for private investment. Industries earmarked

for public sector investment are in the reserve sector namely:

(i) arms, ammunition and other defense equipment and machinery

(ii) Production of nuclear energy,

(iii) Forest plantation and mechanized extraction within the bounds of reserved forests,

(iv) Security printing (currency notes) & minting and,

(v) Railways & air transportation (except certain domestic routes and air cargo)

- No permission of the government required to set up new industries.

- For obtaining industries facilities like procurement of land, electricity, gas and sewerage

connection, importation of capital machinery and raw materials tax rebate, duty drawback

facilities etc. industries need only to be registered with the board of investment (BOI) in a simple

prescribed from.

C. Facilities for Non-Residency Bangladeshis :

Non-resident Bangladesh investors enjoy facilities similar to foreign investors

· Allowed to buy newly issued shares/debentures of Bangladeshi companies

· 10 percent reserved quota for non-resident Bangladeshis in primary shares (IPO)

57 | P a g e

· Foreign currency deposits in the Non-resident Foreign Currency (NFCD) account

D. Facilities and Incentives

Tax holiday 5-10 years depending on location of Industries.

15 years tax holiday for private power generation companies.

· Facilities for repatriation of invested capital, profit & dividend.

· Exemption of tax on interest on foreign loan.

· Tax exemption on royalties, technical know- how & technical assistance

fees.

· Avoidance of double taxation on the basis of bilateral agreements.

· Six month multiple

September, 201

58 | P a g e

1. Main Board as on September 2010

Main Board as on September 2010 Total Number of Listed Securities   463Total Number of Companies   246

Total Number of Mutual Funds   28

Total Number of Debentures   8

Total Number of Treasury Bonds   179

Total Number of Corporate Bonds   2

     

Total number of Shares/Certificates:   (No. in mn)

Total Number of Shares & Mutual Fund Certificates of All Listed Securities*

  11,283

Total Number of Shares of All Listed Companies   9,698

Total Number of Certificates of All Listed Mutual Funds   1,575

    (No. in ' 000)

Total Number of All Listed Debentures   409

Total Number of All Listed Gov. T-Bonds   4,034

Total Number of All Listed Corporate Bonds   4,336

     

Total Issued Capital of : (Figure Tk.in mn)

(Figure US$ in mn)

All Listed Securities 627,022 8,998.59

All Companies Shares 202,167 2,901

All Mutual Funds 16,066 231

All Debentures 140 2

All Listed Govt. T-Bonds 404,313 5,802

All Listed Corporate Bonds 4,336 62

     

Total Market Capitalization of: (Figure Tk.in mn)

(Figure US$ in mn)

All Listed Securities 3,020,194 43,344

59 | P a g e

All Listed Companies Shares 2,578,559 37,006

All Listed Mutual Funds 32,931 473

All Debentures 576 8

All Listed Govt. T-Bonds 404,313 5,802

All Listed Corporate Bonds 3,815 55

Conversion Rate: BDT against USD 69.68  

     

* Total No. of Shares/Share Capital / Market Capital includes Bonus /Right of shares.

 2. Sectoral Performance - September 2010

DSE Sectoral Performance - September 2010Sector Market Capitalization in

mn% oftotalMkt Cap

Turnover Tk. in mn % oftotal

Turnover

September August September

August

Financial Sector             Banks 661,151.86 622,510.62 25.17 56,351.91 54,774.34 18.03Financial Institutions

315,119.61 324,051.18 12.00 56,490.42 69,496.61 18.07

Insurance 139,350.38 128,542.88 5.31 24,614.09 41,088.60 7.87Mutual Funds 32,931.22 32,091.47 1.25 7,201.90 8,009.18 2.30Total 1,148,553.0

71,107,196.1

543.73 144,658.3

2173,368.7

446.28

Manufacturing            Foods 56,707.35 53,896.24 2.16 5,474.24 8,037.64 1.75Pharmaceuticals 211,990.99 185,797.73 8.07 18,630.78 22,176.23 5.96Textile 111,342.72 112,465.94 4.24 29,876.64 35,568.31 9.56Engineering 135,475.29 123,064.52 5.16 34,808.45 42,871.95 11.14Ceramics 58,333.44 59,304.98 2.22 3,614.22 6,406.94 1.16Tannery 17,205.45 16,233.87 0.66 2,606.72 4,252.59 0.83Paper & Printing 1,377.52 1,301.52 0.05 51.89 43.31 0.02Jute 813.07 807.59 0.03 43.46 15.11 0.01Cement 84,031.82 71,462.46 3.20 16,736.14 11,716.56 5.35Total 677,277.66 624,334.85 25.78 111,842.5

3131,088.6

335.78

Service & Miscellaneous          Fuel & Power 329,527.36 317,918.32 12.55 26,501.97 43,272.91 8.48Service & Real Estate

38,865.98 38,636.23 1.48 6,767.92 13,537.80 2.17

IT 4,745.87 5,396.85 0.18 1,862.21 2,051.25 0.60Telecommunication

323,261.83 345,001.66 12.31 1,675.00 3,162.69 0.54

60 | P a g e

Travel and Leisure

11,381.59 9,416.59 0.43 4,702.81 5,087.85 1.50

Miscellaneous 89,258.35 92,629.95 3.40 14,509.61 22,806.47 4.64Total 797,040.97 808,999.60 30.34 56,019.52 89,918.96 17.92Bond             Corporate Bond 3,815.50 3,778.18 0.15 41.98 61.74 0.01Total 3,815.50 3,778.18 0.15 41.98 61.74 0.01              Grand Total 2,626,687.2

12,544,308.7

7100 312,562.3

5394,438.0

7100

 

 3. Performance of DS 20 - September 2010

Performance of DS 20 - September 2010

Sl. No.

Company Mcap

Tk mn

% of

Mcap

Turnover

Tk mn

% of

Turnover

1 Islami Bank 42,143.59 1.60 904.86 0.29

2 NBL 36,797.18 1.40 3,139.33 1.00

3 Prime Bank 26,617.50 1.01 610.57 0.20

4 Southeast Bank 17,234.69 0.66 1,889.76 0.60

5 Dhaka Bank 16,090.57 0.61 2,944.09 0.94

6 Uttara Finance 17,974.44 0.68 3,965.28 1.27

7 Bangladesh Lamps 2,009.82 0.08 96.19 0.03

8 Singer Bangladesh 15,881.49 0.60 1,826.96 0.58

9 BATBC 41,844.00 1.59 1,803.15 0.58

10 AMCL (Pran) 1,506.00 0.06 90.20 0.03

11 BOC Bangladesh 12,048.31 0.46 1,381.33 0.44

12 Square Textile 18,028.23 0.69 5,188.72 1.66

13 Beximco Pharma 31,366.07 1.19 3,099.72 0.99

14 ACI Limited. 7,610.25 0.29 243.17 0.08

15 Square Pharma 68,371.51 2.60 5,741.39 1.84

16 Meghna Cement 9,447.92 0.36 5,670.40 1.81

17 Apex Tannery 2,694.81 0.10 905.06 0.29

18 Bata Shoe 10,142.35 0.39 901.85 0.29

19 Monno Ceramic 1,086.75 0.04 41.00 0.01

20 GQ Ball Pen 1,170.82 0.04 506.59 0.16

61 | P a g e

 

4. Top 20 Companies by Market Cap- September 2010

Top 20 Companies by Market Cap - September 2010Sl. No

Name  Category Mkt. Cap.

Tk. Mn

% of total Mkt. Cap.

1 GrameenPhone Ltd. DA 323,261.83 11.852 Titas Gas Trans. & Dist. Co. Ltd. DA 93,697.72 3.433 ICB DA 79,675.00 2.924 Square Pharma DA 68,371.51 2.515 BEXIMCO DA 52,159.16 1.916 Dhaka Electric Supply Company DA 48,695.82 1.787 Prime Finance & Invest. DA 42,291.22 1.558 Islami Bank DA 42,143.59 1.549 BATBC DA 41,844.00 1.5310 Lafarge Surma Cement DZ 41,722.34 1.5311 BSRM Steels Limited DA 40,999.66 1.5012 Summit Power Ltd. DA 39,836.25 1.4613 BEXTEX Limited DA 39,134.94 1.4314 Power Grid Company of Bangladesh Ltd. DA 39,068.30 1.4315 AB Bank DA 38,832.41 1.4216 UCBL DA 37,000.06 1.3617 NBL DA 36,797.18 1.3518 Pubali Bank DA 36,432.26 1.3419 Dutch-Bangla Bank DA 36,280.00 1.3320 Export Import (Exim) Bank DA 33,432.57 1.23

 5. Monthly Performance for one year (DSE Performance - September 2010)

DSE Performance: October 2009 to September 2010Month

 

DSE Turnover Ratio ofTurnover to

Market Cap.

IndexValue

Tk. in mn

Volume

Nos. mn

DSI DGEN DSE 20

Oct-09 210,506.03 1,171.27 0.14 2,816.26 3,364.26 2,253.23

Nov-09 179,817.56 657.11 0.10 3,632.40 4,380.95 2,513.53

Dec-09 179,263.26 591.42 0.09 3,747.53 4,535.53 2,613.49

Jan-10 262,869.41 1,020.70 0.12 4,422.81 5,367.11 3,030.19

Feb-10 249,982.12 953.64 0.12 4,549.60 5,560.56 2,992.93

62 | P a g e

Mar-10 175,115.99 747.99 0.08 4,573.81 5,582.33 2,952.01

Apr-10 191,303.18 700.63 0.08 4,641.54 5,654.88 3,039.17

May-10 386,238.36 1,013.99 0.08 5,030.05 6,107.81 3,432.23

Jun-10 387,733.65 1,203.94 0.14 5,111.63 6,153.68 3,650.04

Jul-10 322,769.28 1,163.22 0.11 5,278.89 6,342.76 3,721.78

Aug-10 394,438.07 1,793.43 0.13 5,555.49 6,657.97 3,874.50

Sep-10 312,562.35 1,602.83 0.10 5,930.90 7,097.38 4,137.93

6. Top 20 Companies by EPS - September 2010

Top 20 Companies by EPS - September 2010

Sl

No.

Company Name Category Face

Value

EPS

Actual Tk

EPS

%

PE Dividend (%)

As per last AGM 1 Reckitt Benckiser(Bd.)Ltd. DA 10 41.90 418.99 29.53 750%

2 BOC Bangladesh DA 10 40.07 400.72 19.76 177%

3 1st ICB M.F. DA 100 385.24 385.24 21.87 310%

4 Renata Ltd. DA 100 365.21 365.21 30.15 60%, 25%B

5 BATBC DA 10 34.48 344.76 20.23 300%

6 Bata Shoe DA 10 32.85 328.51 22.57 220%

7 ACI Limited. DA 10 30.64 306.37 12.8 105%

8 Glaxo SmithKline DA 10 26.88 268.78 53.53 160%

9 Berger Paints DA 10 25.00 249.98 38.74 150%

10 BEXIMCO DA 10 21.62 216.20 14.58 60%B

11 Pharma Aids DA 100 210.27 210.27 18.42 30%

12 Apex Adelchi Footwear Ltd. DA 100 188.03 188.03 17.47 35%

13 Atlas Bangladesh DA 10 16.79 167.92 31.65 75%, 33.33%B

14 Marico Bangladesh Ltd. DA 10 16.45 164.50 41.87 25%

15 National Tea DA 100 156.78 156.78 28.06 20%

16 Padma Oil Co. DA 10 15.36 153.56 64.98 50%, 200%B

17 Heidelberg Cement Bd. DA 100 150.59 150.59 25.52 38%

18 LankaBangla Finance Ltd. DA 10 14.00 140.05 36.49 15%, 20%B

19 Aramit DA 10 13.80 137.98 42.77 15%, 50%B

20 IDLC Finance Limited DA 100 136.98 136.98 33.92 10%, 100%B

 7. Sectoral P/E - September 2010

Sectoral P/E - September 2010 

Sector

Sectoral Price Earnings RatioSep-10 Aug-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04

Bank 16.50 15.72 18.17 16.62 24.97 15.49 17.90 21.74Financial Institutions 47.04 48.38             Mutual Funds 17.52 25.08 29.06 20.37 20.29 6.13 6.55 8.27Engineering 66.98 60.95 36.50 30.24 28.57 17.34 14.14 18.62Food & Allied 23.37 22.22 17.29 16.93 23.28 18.69 9.13 10.11Fuel & Power 28.00 27.02 17.71 15.83 35.95 18.87 22.32 14.79Jute 53.39 53.28 27.23 12.15 7.98 6.74 12.55 19.56Textile 55.89 57.49 32.93 13.85 12.14 12.01 10.08 15.30Pharmaceuticals 36.29 34.38 27.64 30.96 21.05 11.76 10.84 18.19Paper & Printing 35.21 33.27 27.59 9.36 6.23 6.62 4.69 1.82Service & Real estate 67.29 66.89 45.65 22.66 8.82 12.62 8.16 9.61Cement 38.11 32.50 56.90 10.26 12.61 18.53 16.13 25.23IT 68.31 77.68 60.71 46.52 15.25 11.12 10.46 25.11Tannery 20.98 19.66 15.39 16.43 15.38 8.00 10.28 10.51

63 | P a g e

Ceramic 118.66 120.65 39.97 47.80 29.85 14.88 17.06 25.74Insurance 47.87 43.60 31.39 21.81 15.59 10.24 20.87 26.92Telecommunication 19.82 21.15 84.85           Travel and Leisure 87.05 72.02             Miscellaneous 20.20 20.95 28.85 34.43 14.43 11.05 7.83 13.21Market P/E 26.29 25.81 25.65 18.42 23.58 14.51 13.85 18.40

   

  8. Daily Market Data - September 2010

Market Data during September 2010Date

 

DGEN

 

Change DSI

 

DSE 20

 

Securities

Traded

No. of

Trades

Volume of

Transactio(Nos. in lakh)

Turnover

(Tk in mn)

Mkt Cap

(Tk in mn)

Inpoint

s

In%

02/09/10

6,774.87

116.90

1.76 5,669.86

3,913.62

253 204,517

850 15,217.66

3,035,273.16

05/09/10

6,889.88

115.01

1.70 5,782.42

3,961.27

252 205,694

736 16,228.35

3,073,963.39

06/09/10

6,803.69

(86.19)

(1.25)

5,705.88

3,934.71

256 206,142

821 15,061.72

3,039,707.51

08/09/10

6,807.24

3.56 0.05 5,714.24

3,954.34

257 215,406

936 16,046.66

3,037,551.71

13/09/10

6,796.48

(10.76)

(0.16)

5,701.61

3,977.62

250 147,463

536 10,283.62

3,031,029.34

14/09/10

6,805.71

9.24 0.14 5,705.15

3,981.55

257 153,090

524 11,315.59

3,035,846.35

15/09/10

6,792.84

(12.87)

(0.19)

5,691.99

3,975.97

253 170,384

689 13,371.85

3,026,479.35

16/09/10

6,797.47

4.63 0.07 5,692.91

3,958.67

251 177,003

734 13,409.99

3,023,236.88

19/09/10

6,844.98

47.51 0.70 5,728.27

3,971.23

257 228,554

970 18,166.06

3,034,709.08

20/09/10

6,897.56

52.59 0.77 5,775.11

4,045.75

262 255,349

1091 19,009.55

3,058,199.94

21/09/10

6,947.14

49.57 0.72 5,817.58

4,137.24

260 269,021

1078 20,795.13

3,076,557.44

22/09/10

6,882.12

(65.02)

(0.94)

5,769.33

4,122.57

258 252,681

1047 17,776.45

3,057,498.88

23/09/10

6,904.08

21.96 0.32 5,787.03

4,096.84

259 218,419

900 15,806.26

3,062,236.71

26/09/10

6,958.69

54.61 0.79 5,832.90

4,123.50

260 245,067

968 19,111.91

3,076,161.36

27/09/10

7,026.27

67.58 0.97 5,885.79

4,137.13

253 283,962

1048 22,569.77

3,094,347.80

28/09/10

7,042.37

16.10 0.23 5,892.46

4,127.35

251 287,837

1062 24,719.49

3,099,442.90

29/09/10

7,088.54

46.17 0.66 5,927.16

4,145.33

254 264,524

1016 20,173.34

3,108,673.32

30/09/10

7,097.38

8.84 0.12 5,930.90

4,137.93

252 284,649

1022 23,498.97

3,113,233.18

 

64 | P a g e

Chapter 6Trend of Market performance and Growth

65 | P a g e

6.1 Trend of Market Performance:

Liquidity Analysts generally use the term "liquidity" to refer to the ability to easily buy and sell securities. A comprehensive measure of liquidity would include all the costs associated with trading, including the time costs and uncertainty of finding a counterpart and settling the trade. As the direct measure of liquidity is beset with complexity, analysts typically use proxy measures of liquidity.

Total value traded/GDP equals total value of shares traded on the stock market divided by GDP. The total value traded ratio measures the organized trading of equities as a share of national output .The total value traded/GDP ratio complements the market capitalization ratio. Together, market capitalization and total value traded/GDP inform us about market size and liquidity. Table 3 shows the liquidity situation of Bangladesh stock market in terms of total value traded to GDP ratio. The ratio has increased form an insignificant number (0.000228) in 1990-91 to 4.05 % in 2006-07. Mean value of 0.015 with a standard deviation of 0.011 for the ratio imply that the increase is not even smooth; there is a marked fluctuation in the value traded to GDP ratio over the years.

Turnover equals the value of total shares traded divided by market capitalization. High turnover is often used as an indicator of high level of liquidity. Turnover also complements total value traded ratio. While total value traded /GDP captures trading compared with the size of the economy, turnover measures trading relative to the size of the stock market. Put it differently, a small, liquid market will have a high turnover ratio but a small total value traded/GDP ratio.

Below table depicts the turnover ratio of the stock market of Bangladesh.. During the study period it increased form 1.1% to 17.5%. The turnover ratio peaked at 62.1% during the year 1998-99 showing a declining trend afterwards. Minimum and maximum ratio of 0.012 and 0.621 during the study period with a mean ratio of 0.215 and standard deviation of 0.192 indicate marked fluctuations in the turnover ratio. The linear trend line (figure C) of turnover ratio shows an upward trend though the R2 of 0.093 indicates a poor model fit.

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Liquidity measure- total value traded to GDP

Year GDP(billion Taka)

Total value traded(billion Taka)

Value traded /GDP

Year GDP(billion Taka)

Total value traded(billion Taka)

Value traded /GDP

1990-91 834.39 0.19 0.000 1999-00 2370.85 53.2986 0.022

1991-92 906.5 0.12 0.000 2000-01 2535.46 54.6645 0.022

1992-93 948.07 0.44 0.001 2001-02 2732.01 48.571 0.018

1993-94 1030.36 0.58 0.001 2002-03 3005.8 25.8407 0.009

1994-95 1589.76 6.3997 0.004 2003-04 3329.73 70.7324 0.021

1995-96 1663.24 36.222 0.022 2004-05 3707.07 78.8775 0.021

1996-97 1807.07 25.9485 0.014

2005-06 4157.28 57.4001 0.014

1997-98 2001.76 48.4044 0.024

2006-07 4674.97 189.7104 0.041

1998-99 2196.95 50.5023 0.023

Descriptive statistics

Mean Standard

deviation

Kurtosis

Skewness Minimum Maximum

Value traded to GDP ratio

0.015 0.011 0.024 0.264 0.000 0.041

Turnover ratio 0.215 0.192 -0.384 0.923 0.012 0.621

Source: Computed from data of various issues of Bangladesh statistical year book, SEC quarterly review and DSE monthly review

6.2 Indicators of Stock Market Growth

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Literatures provide no unique measure of indicators of stock market development. However it is evident from the literatures (see for instance, Naceuret et. al. 2007; Yartey, 2005; Demirguc-Kunt, and Ross. Levine, 1996; ) that the broadly used indicators of stock market growth are market size in terms of market capitalization, liquidity of the market, market concentration, degree of listing, volatility in the market, foreign portfolio investment and integration of the market. In this study we examine all these indicators (excepting integration variable) to evaluate the growth pattern of Bangladesh stock market.

Stock market size: Market capitalization ratio equals the value of listed shares divided by GDP. Analysts frequently use the ratio as a measure of stock market size. In terms of economic significance, the assumption behind market capitalization is that market size is positively correlated with the ability to mobilize capital and diversify risk on an economy wide basis (Agarwal 2001). La Porter et al. (1997, 1998) and Levine and Zervos (1998) used the market capitalization to GDP ratio as an indicator of market development. Table 1 and figure A. show the size of Bangladesh stock market. Market capitalization ratio has increased from 1.4 % in 1990-91 to 10.2 % in 2005-06 with a sudden increase to 29.0 % in 2006-07 .Total market capitalization reached to Tk. 1366.53 billion in 2006-07 from Tk. 11.485 billion in 1990-91.This shows a remarkable cumulative increase of 117.98 times . Mean market capitalization ratio of 0.077 with a standard deviation of 0.073 points to high level of volatility in market capitalization. Linear trend line shows an upward trend in market capitalization to GDP ratio though R2 value of 0.3821 indicates a poor model fit.

Stock market size of Bangladesh

Year GDP(billion Taka)

Market capitalization (billion Taka)

Market capitalization

to GDP

Year GDP(billion Taka)

Market capitalization(billion

Taka)

Market capitalization

to GDP

1990-91

834.39 11.485 0.014 1999-00 2370.86 120.69 0.051

1991-92

906.5 10.397 0.011 2000-01 2535.46 121.586 0.048

1992-93

948.07 12.29 0.013 2001-02 2732.01 131.73 0.048

1993-94

1354.12 18.098 0.018 2002-03 3005.80 182.899 0.061

1994-95

1525.18 80.657 0.051 2003-04 3329.73 439.934 0.132

1995-96

1663.24 315.149 0.189 2004-05 3707.07 453.018 0.122

1996-97

1807.01 124.134 0.069 2005-06 4157.28 420.850 0.102

1997- 2001.77 91.637 0.046 2006-07 4674.97 1366.53 0.290

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98

1998-99

2196.97 81.324 0.037

Descriptive statistics of Market capitalization

to GDP ratio

Mean Standard deviation

Kurtosis Skewness Minimum Maximum

0.077 0.073 3.745 1.864 0.011 0.290

Data source: Authors’ calculation from various issues of Bangladesh Economic Review, Statistical Year Book of Bangladesh, Dhaka stock exchange (main board) and Securities and

exchange commission (Annual report and quarterly review).

The second indicator of market size is the number of listed companies. The rationale of including this measure is that as the number of listed company increases, available securities and trading volume also increases. Table 2 shows that during the period under study, number of listed company has grown from 149 to 273 with an average annual growth rate of 4.421% and a standard deviation of 39.006. The upward trend line (figure B) with R2 value of .9589 points to stable growth in the number of listing.

6.3 Problems of DSE:

The unexpected rise and fall in share price mostly followed from the general confidence of the

investors about political stability, euphoria of investment in shares, prospect of quick capital

gains, a vacuum in respect of institutional presence in the share market, monopolistic dominance

of member brokers, inefficiency of the SEC to cape with development, existence to kerb market,

absence of proper application of circuit breaker etc. Delivery Versus Payment mechanism was

used as one of the main vehicles of manipulation. Kerb market give birth fake and forged share

certificate. Although there are increasing tends in all the indicators, DSE is not free from

problems. The problems of DSE may be summarized as under.

Price manipulation: It has been observed that the share values of some

profitable companies has been increased fictitiously sometimes that hampers the smooth

operation of DSE.

Delay in settlement: Financing procedures and delivery of securities sometimes

take an unusual long time for which the money is blocked for nothing.

Biased in dividends: Some companies do not hold Annual General

Meeting (AGM) and eventually declare dividends that confused the shareholders abour the

financial position of the company

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6.4 Conclusion:

We aimed at evaluating the growth of Bangladesh stock market over last decade in terms of some commonly used indicators of stock market development. Our analysis reveals that the Bangladesh’s stock market is growing in terms of market capitalization to GDP, turn over ratio, value traded to GDP and number of listed companies, although the growth over time is not stable and has not yet assumed any obvious pattern. . It also remains highly volatile and concentrated with foreign portfolio investment gradually disappearing.

Appendix

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Appendix

A Questionnaire on

“Profile of Dhaka Stock Exchange(DSE) Ltd”

Dear respondent,

This questionnaire has been designed to conduct a research for the partial fulfillment the course

requirement of Internship, Bachelor of Business English program, Faculty of Business

Administration of International Business Administration and Information System

University. I will appreciate your valuable time & support in filling the questions. Your

cooperation and active participation will enable me to conduct the research work successfully.

Please be assured that the information you provide will be strictly confidential and will be used

only for academic purposes.

Thank you in advance.

Name : ____________________________________________

Occupation: a) Employee of DSE b) Owner of Brokerage House

c) Investor d) General Public

Sex : a) Male b) Female

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Section 1: In General/Common

1. Do you know/heard about DSE and its activities?

a) Yes b) have a little idea c) never.

2. Do you participate any function of DSE?

a) Yes b) No c) Cannot remember

3. Do you know the present Board of Directors of DSE?

a) Yes b) No c) Little bit d) it’s not important

4. Do you think that stock market is important for a country economy?

a) Yes b) No c) I don’t have proper idea d) May be

5. Are there any one in your family investing at Dhaka Stock Market?

a) Yes b) I don’t know c) Not in my family but my other relatives

6. If YES, are they getting profit or losing money?

a) They are in Profit b) They losing money c) I don’t know

7. Do you watch programmed related to stock market on TV?

a) Regularly b) Irregularly c) Never

8. Do you ever enter in the website of DSE?

a) Everyday b) Sometimes c) Once d) Never

8. Do you read DSE’s news, publications on newspaper?

a) Regularly b) Irregularly c) No

9. Do you observe DSE’s Outdoor activities (Press conference, awareness programmed etc)?

a) Regularly b) Irregularly c) No

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10. How will you rate the quality of the Press Release and

Awareness Program of DSE based on the massage structure,

sound, communication, & contents?

[Scale: 5. Excellent; 4. Very Good; 3. Good; 2. Average; 1. Unsatisfactory]

Press Release Awareness Program

SL Quality 1 2 3 4 5 1 2 3 4 5

A Massage Structure

B Information

C Visual

D Content

11. What you think, how can DSE can aware general public to make the stock market

more concrete and helpful for country people?

a) Arrange regular Training program for General investor

b) DSE can take the help of different mass media (as an example: newspaper, TV, Radio etc)

c) Take more action to regulate stock market more efficiently so that people can think before

their investment

Section 2: DSE employee and Brokerage House employee

13. How you think why DSE is important for country like Bangladesh?

a) Its important as at least 7 million people is depends on it

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b) Its contribute country’s GDP

c) Our country can further ahead by collecting money from stock market

d) If we can listed all our foreign company they will more royal for our country

14. What is the maximum duration of “A” category share in DSE?

a) T+5 days b) T+3 days

c) T+10 days d) T+7 days

15. Do you know about TESA (The Electronics Securities Architecture)?

a) It’s a software where investor give their sale or buy order

b) Its a software where people see the current transaction of share

c) It’s a software where all order are executed

d) Above all

16. Do you know about settlement circle of DSE?

a) Yes b) No c) little bit

17. How Important the work of surveillance of DSE?

[Scale: 1. Most Important; 2. Important; 3. Average; 4. Somewhat Important; 5.Least]

Rank Factors

Most Important Safety of InvestorAverage Make the transaction clearimportant Give the market in a position

18. Any suggestion that you have for improving the work of DSE ?

…………………………………………………………………………………………………

…………………………………………………………………………………………………

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…………………………………………………………………………………………………

…………………………………………………………………………………………………

Bibliography

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Books and Journals:

Nassar David, How to Get Started in Active Trading and Investing , 2005

Jiler William, How Charts Can Help You in the Stock Market

Oliver Velez and Greg Capra, Tools and Tactics for the Master Day Trader: Battle-Tested

Techniques for Day, Swing, and Position Traders

R.N Agarwal, “Financial integration and stock markets in developing countries: A study of

growth, volatility and efficiency in the Indian stock market”, 2000

Levine R. and Zervos S. “Stock markets, bank, and economic growth”, American

Economic Review, 1998

Singh A,Financial Liberalization, Stock Markets and Economic Development",1997

Internet Sources:

www.dsebd.org

stockbangladesh.com,

www.dsemonitor.com,

www.mydse.com,

Dhaka-stockexchange.blogspot.com,

icbdm.com,

www.bdstock.com,

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http://www.makemoney.usersboard.com,

www.bdwebguide.com/sharebazar.htm,

www.anfmanagement.com,

Twitter.com/DSE_BD,

http://hubpages.com/hub/Dhaka-Stock-Exchange

www.emerginvest.com/WorldStockMarkets/Bangladesh

www.bd-experts.com

www.bangladeshdir.com

www.docstoc.com

Dse-secretinfo.forumotion.com

Financial-dictionary.thefreedictionary.com

www.sandpworld.com

www.markosweb.com

http://www.accessmylibrary.com/coms2/summary_0286-26621391_ITM

http://bdshareeducation.blogspot.com/

http://financemarket.onlinenewsbd.com/

http://www.blog.sajjadbd.com/2010/05/profita/

http://www.stockbangladesh.com/ami_broker_feed_form.php

http://www.investopedia.com/university/beginner/

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http://www.investopedia.com/default.aspx

http://www.blog.sajjadbd.com/2010/05/profita/

http://www.bdbooks24.co.cc/search/label/Toslima%20Nasrin

http://pujibazar.blogspot.com

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